buying a car

When you go car shopping, you’ll find that one of the first decisions you will have to make is whether or not you want to buy or lease. Believe it or not, roughly 30% of new-car transactions are in the form of a lease, illustrating that more people lease than you might think. Although buying may be good for some, the advantages of leasing are multifold.

Buying vs. leasing: what’s the difference? When you lease a vehicle, you are paying a small fee, as well as monthly payments. Typically, your payments are based on the cost of depreciation during the time you have the car, which is usually two to three years. Buying, on the other hand, usually involves a large down payment and large monthly payments for anywhere from five to 10 years.

According to Kiplinger, leasing is great for people who want low monthly payments, or individuals that don’t have access to large amounts of cash. Although you don’t get to keep the leased vehicle when you are finished, you tend to pay less than you would if you financed it. Plus, there is no danger of going upside-down on your loan (when you owe more than the car is worth). It is possible to save money when leasing.

What it comes down to for most buyers is the cost and the commitment. Buying a vehicle is only a good idea if you can make a large down payment, find low-interest financing, and if you are willing to take care of your model for over a decade. With leasing, there is less pressure, lower monthly payments, and tons of deals.